Drilling Fluids Market Size, Share & COVID-19 Impact Analysis, By Type (Water-based, Oil-based, Synthetic-based and Others), By Application (Onshore and Offshore), and Regional Forecast, 2021-2028

The global drilling fluids market size was USD 8.48 billion in 2020 and is projected to grow from USD 9.39 billion in 2021 to USD 13.61 billion in 2028, exhibiting a CAGR of 5.4% during the forecast period. The global impact of COVID-19 has been unprecedented and staggering, with the product witnessing a negative demand shock across all regions amid the pandemic. Based on our analysis, the market exhibited a decline of -24.8% in 2020 as compared to the average year-on-year growth during 2017-2019. The sudden rise in CAGR is attributable to this market’s demand and growth returning to pre-pandemic levels once the pandemic is over.

These fluids are used in the drilling of wells. They provide primary well control of subsurface pressures through a combination of density and any additional pressure acting on the fluid column. They are typically circulated down the drill string, out the bit, and back up the annulus to the surface to remove drill cuttings from the wellbore. These fluids are critical components of oil and gas exploration. They are a combination of water, oil, clay, and various chemicals. Also referred to as drilling muds, they perform a variety of functions, including cooling and lubricating the drill bit's teeth, transporting drill cuttings to the surface, and reducing drill pipe stuck problems during drilling operations

Covid-19 Lockdowns Disrupted Global Oil & Gas Investment Activity and Supply Chains

The continuing COVID-19 pandemic has had a significant global impact on the oil and gas industry. Due to the current scenario, various oil & gas companies worldwide have to shut down their manufacturing facilities and services as countries implement a lockdown strategy to deal with the pandemic. For example, out of a global total of 28 floating productions, storage, and offloading oil & gas production vessels under construction in the first quarter of 2020, 22 were being built at shipyards in China, Korea, and Singapore countries industrial activity was severely affected. Similarly, the Lombardy region of Italy is a major production hub for advanced engineering equipment for the oil and gas industry and was one of the first regions of rest of Europe to be locked down.

LATEST TRENDS

Rising Focus on Developing Advanced Drilling Fluid Chemicals to Boost the Market Growth

Major players operating in the oil & gas sector are exploring deep and ultra-deepwater opportunities in Latin America, West Africa, and the Asia Pacific to meet the growing oil & gas demand. These investments are rising in offshore and subsea activities.

Key players invest in drilling fluids developing technologically equipped synthetic fluids that successfully operate in harsh climatic conditions. For instance, Schlumberger started manufacturing its fluids with synthetic technology. On September 24, 2018, Schlumberger developed the CemFIT Shield mud-sealing cement system. These newly developed products improve the isolation between hydraulic fracturing stages in long horizontal wells. The CemFIT Shield system interacts with non-aqueous fluids to reduce fluid mobility, lowering the risk of fracturing fluid migration from zone to the casing.

DRIVING FACTORS

Increasing Oil & Gas Exploration Activities Worldwide to Aid Growth

The strong growth for oil & gas demand has created major opportunities for well drilling activities across the globe, which will, in turn, drive the drilling fluid market. North America has the highest production rate for crude oil on offshore resources, followed by Russia and Saudi Arabia. Furthermore, many countries across the globe are investing in finding new resources for the oil & gas sector. For instance, on April 14, 2021, GOM announced two new crude oil production projects that have accounted for 200,000 barrels per day, which is 12% of the total oil production of the Gulf of Mexico. This large project has projected the crude oil production growth in the U.S. Federal Gulf of Mexico (GOM).

Increasing Demand for Shale Gas to Fuel Market Growth

Various factors driving the growth of the global shale gas market are the rising demand for gas-fired power generation technology and the increasing focus on reducing carbon emissions. Many countries worldwide, including Canada, India, and Germany, focus on developing shale gas exploration resources. As per International Energy Agency (IEA), the share of gas in the global energy mix could rise from the present levels of 23% to 25% in 2035, overtaking coal (24%) to become the second-largest primary energy source after oil (27%). In the U.S., shale gas-fired power generation is increasing owing to its several benefits. In the United States, gas-fired generation increased 3% in 2020. In July 2020, shale gas reached 45% of electricity generation in the United States. This factor is likely to drive the shale gas market, which will in turn expected to drive the global drilling fluid market

RESTRAINING FACTORS

Environmental Impact of Drilling Fluids to Hamper Market Growth

These fluids generate toxic chemicals during the down-hole injection and onshore disposal process. These chemicals get mixed with the groundwater, which degrades the groundwater quality. This waste and wastewater return to the environmental cycle and cause severe soil pollution, and disturb marine ecosystems, adversely affecting marine aquatic life. This factor is likely to hamper the global market during the forecast period.

Many government organizations are implementing stringent regulations on drilling chemicals to prevent the dangerous effects of fluid, health, safety, and environment. For instance, On June 4, 2001, U.S. Environmental Protection Agency (EPA) issued guidelines to the Oil and Gas Extraction sector. These effluent guidelines establish technology-based best available technology economically achievable limitations and new source performance standards (NSPS) for the discharge of pollutants from oil and gas drilling operations associated with the use of synthetic-based fluids and other non-aqueous fluids into the water.

SEGMENTATION

By Type Analysis

Water-based Segment to Grow at a High Pace

Based on the type, the global drilling fluids market is classified into water-based, oil-based, synthetic-based, and others.

The water-based segment accounted for the major market share in 2020. Demand for water-based fluids is rapidly increasing, owing to its cost-effectiveness and lower environmental impact of the discharged cuttings and mud.

Synthetic-based fluids are expected to grow rapidly due to their ability to provide excellent thermal stability, borehole control, penetration rates, and lubricity, all of which contribute to lower overall costs. Because of the negative environmental impact of oil-based fluids, the segment is expected to grow slowly during the forecast period.

The others segment consists of foams, mist, gas, dust, aerated liquid, and nitrogen membrane.

By Application Analysis

Onshore Segment to Hold Highest Position

Based on the application, the market is classified into onshore and offshore.

The onshore segment accounted for the highest drilling fluids market share in 2020, and it is anticipated to maintain its positive growth during the forecast period. The onshore oil & gas sector is mainly driven by the rise in demand for energy across the globe and the growth in drilling activities.

The offshore segment is expected to rise at the fastest pace during the forecast period. Oil exploration activities in offshore oil fields have increased as oil prices have recovered. For example, operating offshore rigs saw a yearly increase of about 23.0% in January 2019, compared to a 2.0% increase for onshore rigs for the same month. Furthermore, the rising demand from offshore applications is expected to be driven by rising demand for mud in deep water, harsh environments, and remote locations.

REGIONAL INSIGHTS

The market has been analyzed across five key regions, namely, North America, Asia Pacific, the Middle East & Africa, Europe, and Latin America. 

North America accounted for the 30.68% share of the global market in 2020. North America held a dominant share of the global market in 2020 is anticipated to witness significant growth during the forecast period. The growth in shale gas exploration and fracking operation is driving the market in the region. Major drilling fluids providers such as Schlumberger, Ltd., Halliburton, and Baker Hughes Company, all based in North America, are constantly investing in developing creative solutions.

Asia Pacific region is projected to expand exponentially due to an increase in the discovery of oil fields from untapped reserves. Furthermore, countries such as India and China are heavily investing in reducing their reliance on crude imports, presenting opportunities for fluid manufacturers and vendors in the area.

The market in Latin America is mainly driven by the surge in finding untapped oil and gas reserves. Drilling activities in the area are expected to increase during the forecast period due to large deposits of unconventional hydrocarbon reserves such as shale gas, tight oil, and oil sands, as well as large investments from multinational oil and gas companies.

During the forecast period, the Middle East and Africa will be the fastest-growing region. It includes major oil and gas producing countries such as Saudi Arabia, the United Arab Emirates, Kuwait, Iraq, and Iran, which have some of the world's largest petroleum reserves. Additional factors such as the revival of abandoned oil wells in the Persian Gulf and selling ongoing rig operations are expected to drive offshore oil and gas production in the region.

KEY INDUSTRY PLAYERS

Schlumberger to Focus on Expanding Its Product Line and Utilize Its Channels to Market New Products

Schlumberger Limited is a leading company that provides technology for drilling, reservoir characterization, processing, and production to the oil & gas industry. It is a pioneer of the wireline logging technique that is utilized to obtain downhole data in oil & gas wells

The company supplies diverse products and services, ranging from exploration through production and integrated pore-to-pipeline solutions that help optimize hydrocarbon recovery to deliver reservoir performance. Schlumberger Limited primarily operates through four business segments: Reservoir Characterization, Drilling, Production, and Cameron

On March 8, 2021, ENGIE Solutions, Schlumberger, and SMP Drilling completed a 1,600-meter-deep geothermal drilling project in Vélizy-Villacoublay, France. The multilateral well was drilled using the PowerDrive Archer high build rate rotary steerable system and AxeBlade ridged diamond element bit. The geothermal drilling well will provide heating and hot water supply to 16,000 homes with more than 60% renewable energy.

LIST OF KEY COMPANIES PROFILED:

• Schlumberger (U.S.)


• Halliburton (U.S.)


• Newpark (U.S.)


• Baker Hughes (U.S.)


• TETRA Technologies, Inc. (U.S.)


• Canadian Energy Services (Canada)


• NOV (U.S.)


• Secure Energy (Canada)


• Weatherford (U.S.)


• Q’Max Solutions Inc. (U.S.)


• Global Drilling Fluids and Chemical Limited (India)


• Sagemines


• Scomi Group Bhd (Malaysia)


• Catalyst Middle East (Dubai)


• Flotek Industries, Inc. (U.S.

KEY INDUSTRY DEVELOPMENTS:

• February 2021 - National Oilwell Varco (NOV) launched a falcon reamer for drilling operations in the Middle East & North Africa (MENA). NOV streamlined design of falcon reamer delivers high quality great operational efficiency and provides high-quality wellbores


• March 2019 - Newpark Resources Inc. introduced its new stimulation and completion fluid Kronos at the Offshore Technology Conference (OTC). Kronos is a synthetic-based invert emulsion system designed to comply with the environmental requirements for non-aqueous fluids for use in deepwater drilling applications. Kronos offers thermal stability and excellent environmental performance.

REPORT COVERAGE

The global drilling fluids market research report presents a comprehensive assessment of the industry by offering valuable insights, facts, industry-related information, and historical data. Several methodologies and approaches have been adopted to make meaningful assumptions and views to formulate the market research report. Furthermore, the report covers a detailed analysis and information as per market segments, including fluid type, application, and regions, helping our readers to get a comprehensive overview of the global drilling fluid industry.

REPORT SCOPE & SEGMENTATION